RUSSIA has said it was pulling a battalion of several hundred troops away from the Ukrainian border but kept tens of thousands in place, prompting a worried response from the Kiev government about what the US warned was still a “tremendous build-up.”

Russia moved quickly to strengthen its economic hold on Crimea, with Prime Minister Dmitry Medvedev arriving in this newly annexed peninsula with promises of funds for improved power supplies, water lines, education and pensions for the elderly.

Russia’s takeover of the strategic Black Sea region, its troop build-up near Ukraine’s border and its attempts to compel constitutional changes in Ukraine have markedly raised tensions with the West and prompted fears that Moscow intends to invade other areas of its neighbour.

However, Russian President Vladimir Putin told German Chancellor Angela Merkel in a phone call that some troops were being withdrawn from the Ukraine border, Ms Merkel’s office said. The withdrawal involved a battalion of about 500 troops, Russian news reports said.

The US reacted cautiously to the Russian troop movement, with Secretary of Defence Chuck Hagel saying that “tens of thousands” of Russian forces still remained along the Ukrainian border, a situation he called “a tremendous build-up.”

The new government in Ukraine said the action only increased its uneasiness about Russia’s intentions.

“We have information that Russia is carrying out incomprehensible manoeuvres on the border with Ukraine,” Ukrainian Foreign Ministry spokesman Yevgen Perebyinis said. “Troops in some places are moving backward, some of them are moving forward. Which is why, obviously, we are worried by these movements of armed forces. We have no clear explanation from the Russian side about the aim of these movements.”

Russian Foreign Minister Sergey Lavrov and US Secretary of State John Kerry also discussed Ukraine by phone yesterday, a day after holding talks in Paris, the ministry said.

A senior US official said Mr Lavrov had promised Mr Kerry that a division of Russian troops would be pulled back; a division generally consists of thousands of troops.

“Now there have been reports of possible drawdowns of Russian military forces from the border. We haven’t seen that yet, but if they turn out to be accurate, that would be a good thing,” said White House spokesman Jay Carney.

Concerns of a possible invasion of eastern Ukraine — home to many ethnic Russians — were stoked by the large numbers of troops Russia had along the Ukrainian border for what Moscow said were military exercises.

One Russian battalion — about 500 troops — that had been sent to the Rostov region next to Ukraine was being withdrawn to its permanent base in the central Samara region, Russian news agencies quoted the Defense Ministry as saying Monday.

“Russia’s leadership should deal with problems in the Russian Federation, and not with Ukraine’s problems,” Ukraine’s acting president Oleksandr Turchinov said. “It is Ukrainians that should dictate the form of the new constitution and how the country is structured.”

Mr Medvedev, who led a delegation of Cabinet ministers on a surprise visit to Crimea, pledged that Russia will quickly boost salaries and pensions there and pour in resources to improve education, health care and local infrastructure.

But making no mistake about Russia’s view of the peninsula, Deputy Prime Minister Dmitry Rogozin tweeted a photo of himself upon arrival with the words “Crimea is ours, and that’s that.”

Russia annexed Crimea from Ukraine in March after a hastily called referendum held just two weeks after Russian forces had taken control the Black Sea region. Ukraine and the West have rejected the vote.

The annexation came after Ukraine’s President Viktor Yanukovych was ousted in February and fled to Russia following months of protests. Russia claims the ouster was a coup and that the new Ukrainian authorities are nationalist fascists who will abuse Ukraine’s large ethnic Russian population.

To keep its influence over eastern and southern Ukraine, Russia has pushed for Ukraine to become a federation where regions would have broad powers. The US says it’s up to Ukrainians to determine the structure of their government, not Moscow.

Mr Medvedev said Russia will create a special economic zone in Crimea — a peninsula of 2 million people — that will create incentives for business with lower taxes and simpler rules. Russia will also seek to develop the region as a top tourist destination.

“We must create a new investment history for Crimea, which will be more successful than what it has been,” Mr Medvedev said.

Mr Medvedev particularly emphasised the need to ensure a stable power supply for the peninsula. Crimea currently gets about 80 per cent of its electricity and a similar share of its water from Ukraine, and power cut-offs last week raised fears that the Ukrainian government could use energy as a weapon to bargain with Russia.

Mr Medvedev said Russia already has made sure that Crimea has enough backup power capacity to ensure an uninterrupted electricity supply. He added that Russia will work on long-term solutions to Crimea’s energy problem that could involve linking the region to Russia’s power grid or developing local power generation.

He said efforts will also be made to quickly repair water infrastructure to reduce loss of water. In the future, Crimea could get water from Russia or create its own water reservoirs.

Russia’s defence minister, meanwhile, announced on Monday that all Crimean men of conscription age will get a deferral from the draft for one year.

In Moscow, the lower house of parliament voted unanimously Monday to annul agreements with Ukraine on Russia’s navy base in Crimea. In 2010, Ukraine extended the lease of Russia’s Black Sea Fleet’s base until 2042 for an annual rent of $98 million and price discounts for Russian natural gas supplies.

The United States and the European Union have slapped travel bans and asset freezes on members of Mr Putin’s inner circle for the annexation of Crimea and warned that Russia will face even more painful sanctions if it tries to invade eastern Ukraine.

But in a sign that Russian-US talks could be inching toward a compromise, a senior Russian diplomat changed his tone on Monday while speaking about Ukraine’s May 25 presidential election, which the West has urged Moscow to recognise.

Deputy Foreign Minister Grigory Karasin said in remarks carried by Russian news agencies that the Ukrainian vote should be fair and transparent. While Karasin said constitutional reform in Ukraine should remain the top priority, his statement seemed to indicate a softening of Russia’s previous stance that the presidential vote was premature.

Mr Karasin refused to say if Moscow would recognise the outcome of the vote.